Union Bank gets SEC approval to raise Tier 1 capital

Union Bank has announced that it has received approval from the Securities and Exchange Commission (SEC) to raise the Tier 1 capital following plans to float a N50 billion rights issue in 2017.

The bank in a statement said it anticipates that the rights Issue will be open for subscription in September 2017.

During the offer period, 12.1 billion ordinary shares of 50 kobo each will be available at N4.10 per share, on the basis of five new shares for every seven shares held. The Qualification Date for the Rights Issue, which had already been announced by The Nigerian Stock Exchange, was August 21.

Commenting on the SEC approval, the Chief Executive Officer of the Bank, Emeka Emuwa, said: “The approval of the SEC brings us to the final stages of this important transaction for Union Bank, which is critical to our short to medium term business objectives. The capital raised from the rights issue will support our strategy to accelerate business growth and position Union Bank as a leading commercial bank in Nigeria.”

Chapel Hill Advisory Partners Limited is Lead Issuing House to the Bank, and FSDH Merchant Bank Limited and Stanbic IBTC Capital Limited are Joint Issuing Houses.

According to the Bank, the fund raising, which is by way of rights to existing shareholders, would enable it to maintain compliance with regulatory capital requirements.

Also, it would help the Bank to accelerate business growth, and position it as one of the leading commercial banks in Nigeria.

The Bank, which marks its centenary anniversary this year, will celebrate the 100-year milestone under the themes: Celebrate, Impact and Lead.

According to Emuwa, “Our 100th anniversary presents a unique opportunity for Union Bank to frame its own story, highlighting our many successes over the last century and presenting our simpler, smarter vision of banking and corporate citizenship to a new generation of customers.”

He explained that the group posted a Profit before tax of N15.7billion, which represents six per cent rise when compared to N14.9billion posted in the corresponding period in 2015.

The bank’s gross earnings also rose eight per cent to N126.6billion, from N117.2billion in 2015. Interest income stood at N98.0billion from N90.9billion achieved in the previous year.

He explained further that the improved performance was driven by loan book growth, and improved bank asset yields. The bank’s interest expense went down by six per cent to N33.0billion from N35.2billion in 2015.

Improved customer funding base, less reliance on expensive interbank funding, led to drop in core cost of funds to 5.23 per cent in 2016 from 6.64 per cent in 2015.

The net revenue before impairment of the bank also grew by 14 per cent, from N81.9billion in 2015 to N93.6billion during the year under review.